Knapp v. . Anderson

The defendants did not, by their undertaking, become liable for the debt of their principal, but their obligation was contingent and incident to the legal proceedings for the payment of the judgment that might be rendered upon the appeal. It did not become a debt until the happening of the contingency named, and is not, therefore, within the saving provisions of section 33 of the United States Bankrupt Act of 1867. That section only applies to sureties liable for the debts of the bankrupt existing before, and which would be discharged by the bankrupt proceedings. (Carpenter v. Turrell, 100 Mass., 450; Odell v. Wootten, 38 Geo., 224.)

The defendants' liability rests upon the terms of their undertaking, rather than the clause of the bankrupt act referred to, which only has respect to those liable for the same debt, for or with the bankrupt, "either as partner, joint-contractor, indorser, surety or otherwise." The whole tenor of the act shows that this was designed to include only such debts as were provable against the bankrupt under the act. The defendants undertook, for the payment of all costs that might be awarded against Leszynsky, their principal, the appellant in the action on the appeal and the judgment appealed from, in case the same should be affirmed or the appeal should be dismissed. This was in compliance with the statute (Code, §§ 334, 335), and stayed all proceedings in execution of the judgment. The obligation became operative, and their liability fixed by the final judgment of the appellate court, affirming the judgment appealed from and awarding costs against the appellant.

The discharge of the appellant in bankruptcy, pending the appeal, did not release the sureties upon the appeal from their liability. The discharge did not affect the appeal or stay proceedings upon it, or prevent a judgment therein. (Cornell v.Dakin, 38 N.Y., 253.) If the appellant could have availed himself of his discharge to prevent a judgment and terminate the appeal and the action before judgment, or a dismissal of the appeal, the sureties would have been released, for the very obvious reason that the contingency upon which their liability was to be made operative could not arise. (Carpenter v.Turrell; Cornell v. Dakin, supra; Poppenhausen v. Seely, 3 Abb. Ct. of App. Dec., 615; Odell v. Wootten, supra; Payne v.Able, 7 Bush. [Ky.] 344; S.C., 4 Bank. Reg., 220.)

Bail to the action may be released on motion if their principal is discharged from his debts before their liability is fixed as bail, for the reason that they may at any time surrender their principal, and as upon his surrender he would be entitled to his immediate discharge, to avoid circuity courts release bail without the formality of a surrender. But after their liability has become fixed, it is not released by the discharge of their principal.

Bail in error, or surety in an undertaking upon appeal, for the performance of the judgment that may be given by the appellate court, are not released from their obligation by the discharge in bankruptcy of their principal, pending the appeal, unless the discharge may be interposed to prevent judgment. (Hall v.Fowler, 6 Hill, 630; Flagg v. Taylor, 6 Mass., 34; Burr v. Carr, 7 Bing., 508; Southcote v. Braithwaite, 1 T.R., 624.)

Upon final judgment by the appellate court, the contingency arises, upon which, by the terms of their contract imposed by the statute as a condition of a stay of execution upon the judgment appealed from, their liability was to become absolute. To hold that they were released by the insolvency of the appellant, pending the appeal, would add another condition to the undertaking, not expressed in it or authorized by statute. Such a condition, inserted in the undertaking when given, would invalidate it, as not in conformity to the statute. It would also be a hardship upon the respondent in the appeal, as he, instead of the sureties, would be compelled to take the risk of the continued solvency and ability to pay of the principal, while by the stay, to indemnify against which the undertaking of the sureties is given, he is deprived of the opportunity of enforcing his judgment.

The judgment must be affirmed.

All concur.

Judgment affirmed.